Last year, MaxAB, a B2B food and grocery e-commerce and distribution platform serving a network of traditional traders in Egypt and Morocco, raised its $55 million Series A in two tranches; the latter followed the acquisition of WaysToCap, based in Morocco and backed by YC. The moves signaled MaxAB’s ambition to dominate Egypt’s and North Africa’s B2B retail and e-commerce market, which includes Cartona and troubled Capiter, other players that have raised significant capital to compete in the past year.
To continue growing due to growing food and grocery demand and fuel its expansion into the MENAP region, MaxAB has raised more money, this time a USD 40 million pre-Series A round.
Although smaller than last year’s prize round, CEO Belal El-Megharbel told TechCrunch that the pre-Series A was neither a bear nor a low round in terms of valuation. He also noted that the company raised new capital, not because it needed money, but because “there are a lot of opportunities that we believe we can take advantage of faster the more capitalized we are.” MaxAB with large assets has raised over 100 million dollars in total.
Small traditional retailers serve as the backbone of the FMCG industry across Africa. For most B2B e-commerce platforms across the continent, groceries are one of the many consumer goods that help retailers source from suppliers. For MaxAB, this is the sweet spot. And since its launch in 2018, MaxAB has connected suppliers with more than 150,000 unique traditional traders in this food and grocery supply chain in Egypt and Casablanca, Morocco, delivering more than 2.5 million orders within that time frame.
MaxAB’s perspective of going deeper rather than broad with its product offering also extends to the way it considers geographic expansion. After increasing supply to B2B supermarkets across Egypt for more than three years, it intends to leverage its network and relationships with local and multinational suppliers to advance full distribution in Morocco, which now accounts for 10% of MaxAB’s business, and entry into Saudi Arabia for the 2023 finale.
The company estimates that more than 750,000 small businesses need its services in Egypt and Morocco alone. At the same time, Saudi Arabia is attractive because of the government’s efforts to digitize the informal sector and FMCG’s willingness to explore new business models.
“We’re trying to offer more services to supermarkets because they’re the backbone of the economy we operate in before we jump into these other supply chains. Think of the Amazon; they continued to sell books for eight years before adding another category. And that’s the school of thought we like to follow,” said the CEO who founded MaxAB with Mohamed Ben Halim. “In Egypt, we have focused on launching a supermarket supply chain and will use the lessons learned from that to launch in various markets. It’s easier to launch a supermarket supply chain in multiple markets than to launch, say, electronics in our main market, because it’s just a completely different business model that we have to relearn from scratch.”
Another growth stream for MaxAB is the fintech business launched last year, which leverages a large pool of merchants and operational capability to perform cash collections. And its initial approach to offering financial services differs from the competition; launched an account aggregation product – whose transaction value has grown 5x YTD – instead of the BNPL product that many B2B e-commerce platforms introduce to merchants first.
It didn’t take long for MaxAB to enter the popular B2B fintech category; Last month, the platform launched a working capital product for its merchant base. However, like Wasoko, another B2B e-commerce platform based in sub-Saharan Africa, MaxAB chose not to raise debt financing to expand this part of its business. According to El-Megharbel, who was a former managing director at Careem, MaxAB is currently getting a lot of credit from suppliers to help it finance its working capital without borrowing, at least for now. “And because the buy now pay later product is still expected, we can still finance with equity capital without paying debt that we won’t use in the short term,” the CEO added.
MaxAB’s equity round includes an impressive list of new investors: DisruptAD, ADQ’s venture capital platform; British International Investment (BII); and Menlo Park-based private equity firm Silver Lake, its first check of any kind on an African startup. Silver Lake invested through its long-term capital strategy with Mubadala Investment Company.
“We have always prided ourselves on our ability to attract top investors to the region. Historically, since our seed round, we’ve always had at least one VC who invested for the first time in Egypt, North Africa or Africa,” El-Megharbel said of the investment, referring to firms like 4DX Ventures and Flourish Ventures. They participated in this round along with other existing investors, Beco Capital and Africa Platform Capital.